As 2018 draws to a close, our practice consultants reflect on the trends, challenges and highlights that have stood out this year.
Moira Benigson, Managing Partner
On the 3rd of December, Michele Obama spoke at the South Bank. Tickets went on sale a month before and the non-member allocation sold out in 4 minutes. Kate Winslet is appearing at the Dorfman Theatre. There was so much demand for those tickets that the only way to get one was via a ballot.
In what has been a tough year across many consumer-facing industries, it’s a timely reminder of how the power of ‘theatre’ can draw in a crowd. This year, we’ve placed more chief transformation, digital and data officers than ever – across PLCs through to private equity-backed businesses – and it’s clear companies are having to constantly evolve to meet the demands of the times.
My work on Boards of the Future has gone from strength to strength. The challenge of reshaping sectors and industries to understand and meet the demands of the modern economy is ongoing. I’ll wholeheartedly continue to engage with promising young candidates and forward-thinking Chairs willing to get stuck in to adapting complex businesses to the needs of today’s and tomorrow’s customers.
Questions of succession have been raised for Italian luxury houses following the sale of several brands to non-Italian owners. In particular, Michael Kors’ acquisition of Versace in September. But as we’ve discovered this isn’t a sector-wide trend. The Ermenegildo Zegna Group took matters into its own hands and snapped up American suit company Thom Browne and a minority stake in Indian menswear brand Raghavendra Rathore Jodhpur to balance the odds.
In addition, visual merchandising has never been more important to create theatre in retail. Engagement is top of the agenda as consumers look for products and shopping experiences with a difference. Retailers have responded with experiential offerings leaving customers with the sense of an immersive day out.
There’s one brand that still stands out for me and that’s Glossier. It’s run at creating not just products but a self-sustaining ecosystems of engagement will be copied by many vying to stay relevant. 2019 will surely reward those who aren’t afraid to challenge norms, lead from the front and disrupt.
Elliott Goldstein, Partner and Head of Retail, Leisure & Consumer
2018 has been a particularly ferocious year for consumer facing industries. Yet such adversity isn’t wholly bad – it’s forced everyone to up their game. For instance, in the Department Store world, premium players like Selfridges and Harrods continue to curate products and experiences beloved by customers – whilst other players, slower to change, have fallen by the wayside.
Likewise, we’ve seen several digital transformations come to fruition. Who would have thought 10 years ago that Shop Direct would be able to successfully exit its catalogue business, and reinvent itself as Very, or that Argos is now a serious ecommerce player, competing with Amazon?
Whilst transformation and becoming more customer centric is a priority for most retail and leisure businesses, one part of our world that has yet to transform is the retail and leisure property sector.
The days of simply leasing properties to retailers are now long gone. Landlords need to become more active commercial partners, not simply a rent collection model. Westfield is a prime example of how to get things right – and others need to follow their lead in becoming attractive destinations for customers.
Positively, such turbulent times often require an injection of fresh leadership to provide new energy, direction and strategy. In our sectors, we’veseen a number of successful leadership transitions during 2018 – which gives MBS huge confidence in the ability of our sectors to withstand 2019: Alan Jope at Unilever, Andrew Livingston at Howdens, Graham Bell at B&Q, Paul Flaum at Bourne Leisure, Peter Pritchard at Pets at Home, Simon Smith at SSP, Tim Stacey at DFS, Graham Stapleton at Halfords and Nick Wilkinson to name just a few.
No doubt 2019 will be as “interesting” a year as 2018. One that I am sure of, however, is whichever way the wind blows, change is definitely the new constant.
Stephen Rosenthal, Consultant and Head of Tech & Digital
In last year’s annual review, I called 2017 the watershed year in which consumer companies first truly understood the value and potential of the data at their disposal. 2018 has taken that theme and brought the customer into the mix.
From the roll out of GDPR to the almost daily news headlines of the security issues facing the likes of Facebook, Amazon and Google, for the first time, customers now understand the potential and risks of data as fluently as the companies looking to attract their attention and cash.
Clients from across the consumer landscape in the UK, Europe and North America have tasked us with finding Chief Data Officers, Chief Marketing Officers, Product Directors, Ecommerce Directors and a broad range of senior performance marketing leaders. With ecommerce this year breaking through the 20% of total purchases barrier, coupled with the most challenging high street environment in living memory, companies need senior executives who can attract, retain and repeatedly remarket digital customers.
The challenge is far larger than “bricks vs clicks”, as last week’s ASOS profit warning and the subsequent shockwave that followed showed.
Digital ubiquity demands more customer control. To stand out in an increasingly saturated market, brands are turning to flexible manufacturing and customisation, giving consumers what they want, how they want, when they want.
Looking forward to 2019, I predict the roll out of the 5G mobile network will once again fundamentally transform what we as consumers expect and, shortly thereafter, demand from the companies looking to secure our custom.
Thirza Danielson, Consultant in the Retail and CFO practice
What a fascinating and busy year for the retail practice at MBS. A highlight for me is that 61.5% of our 2018 placements in retail have been diverse.
It’s been a challenging year for the sector with several administrations, CVAs and store closures. We’ve been lucky enough to be at the heart of the action, supporting well-loved retailers through company-wide transformations.
Next year will see retailers watching the weather forecast as they pray for perfect conditions to drive footfall. Especially after a bad start this year with the “beast from the east” followed by the hottest summer that I can remember. Unfortunately for some, the extended period of warm weather impacted a sizeable chunk of their profits.
Struggling retailers have also suffered against business rates forcing companies to spend vast sums on tax for shops which are struggling to turn a profit.
But it’s not all doom and gloom. There have been some exciting developments in the sector, the obvious one to mention is the Sainsbury’s/ASDA merger which we’ve been watching with interest as the Competition and Markets Authority’s in-depth investigation continues.
In terms of innovation, we’re yet to see AI deployed at a large scale in retail. Perhaps this will be the next big objective.
There’s also the uncertainty of Brexit as we go into 2019, but overall it’s been a great year for MBS and I’m looking forward to 2019.
Huw Llewellyn-Waters, Consultant in the Global Consumer practice
Uncertainty has dominated 2018. In a very obvious political sense we’ve see this first hand. But we’ve also seen uncertainty in our work further afield in the Middle East, Africa and Asia; socio-economic developments are having a massive impact on consumer behaviours and trends.
The responsibility of brands in the modern day has never been more important. The activities of Nike alongside Colin Kaepernick is a powerful reminder of the role brands can play in the most contentious and important of social issues.
Corporate responsibility is also at the top of the agenda. This is reflected in major organisations like Diageo, which has deciding to hire a chief sustainability officer.
The future of emerging markets must be dealt with responsibly and sustainably. Local talent needs to be continually invested in and those who do so are already beginning to win big – the talent pipeline achieved from Unilever’s Singaporean leadership academy is already delivering dividends from a talent perspective.
Uncertainty has also been presented by lightning fast innovation. With their more naturally fast-paced style, smaller businesses have flourished. What we’ve seen in 2018 is bigger businesses adopting greater humility and learning to act more like entrepreneurial outfits.
As the challenges of change and uncertainty undoubtedly continue into 2019, who will be the businesses and brands that win trust, embrace accountability and modernise the fastest? We’ll just have to wait and see.
Sam Seigler, Consultant in the Travel, Leisure and Hospitality practice
It’s been a tricky year for the big players in leisure and hospitality. In restaurants we’ve seen CVAs rolled out by the likes of Carluccio’s, Prezzo and Byron. But there have also been lots of positive developments. Wagamama, McDonalds’ Nando’s, Pizza Express and Azzurri are all, for now, showing that consumer demand is still definitely there.
This year, MBS have been advising on how to drive operational focus and cost management – it’s apparent that companies are doubling down on top talent – particularly when it comes to CFOs, COOs and CEOs who can deliver in hard times.
We’ve seen impressive growth in Hotels and Leisure – the sector definitely feels more buoyant compared to last year, and UK operators have discovered how to broaden their appeal by investing in unforgettable experiences.
That being said, some international tour operators are struggling – it’s been a particularly bad year for the likes of Thomas Cook. Whereas, those offering bespoke experiences or targeting niche demographics like Saga and Rivieria Travel are doing much better.
This year, Pubs have done well to attract attention from the likes of Patron, Caledonian, Graphite and other private equity firms. Thanks to strong earnings during the summer, brought on by the World Cup and that fantastic period of warm weather. It’s been a good end to the year for many in the leisure sector.
Pearls of wisdom
We revisit some of the insights, analysis and advice shared by industry leaders in the MBS Weekend Edition this year.
“I’m probably one of the few people who started out as an artist and ended up a CEO, which is an unusual pivot”- Celia Francis, CEO, Rated People. She discusses why product developers make great leaders here.
“There’s a new and exciting buzz in Manchester. Entrepreneurs, agents of change and young people with an idea can afford to live and succeed here. Manchester today is a thriving, affordable, major city. Investors are recognising the potential here and are mobilising to support the development and growth of technology businesses” – Angela Spindler, CEO, N Brown. She talks on the rise of data-driven ecommerce here.
“Rather than asking ourselves how to fix the deficiencies in the current supply chain, we wanted to redesign the entire chain from start to finish; Instead of building large -scale farms outside of the city, optimising on a specific yield, and then distributing the produce, we decided it would be more effective to distribute the farms themselves and farm directly where people live and eat” – Erez Galonska, co-founder & CEO, InFarm. He speaks on vertical farming here.
“Fashion is changing in front of our eyes; it has become even more of a cultural signifier. But what has not changed is that fashion then and now is the most visible form of individual expression for a person and that is why the importance of design and empowering difference is something that shouldn’t change” – Stephanie Phair, chairperson, BFC.She examines the future of the fashion industry here.
“We took the essence and the values of the clothes and we tried to use them in an abstract way . . . we’re not trying to restore the clothes but to interpret them” – Yael Shenberger, chief designer, ATA. She talks about the evolution of ATA’s apparel here.
“Ultimately, organisations have a responsibility to create an environment where there is a level of support that allows women to feel they can come back, they can contribute, they can progress, and that they can apply for new, bigger jobs” – Tea Colaianni, founder and chair, Women in Hospitality 2020. She speaks on workplace diversity here.
“One of the major problems with blockchain is that everybody is hyping it, and it’s now become a solution, that’s actually looking for a problem to solve” – Cameron Geiger, senior vice president, Walmart Technology Business Engagement. He talks about blockchain in supply chains here.
“We’re mindful that we have a role to play for society, not just our viewers. We exist to help shape people’s views – to help them to think differently. People join here with multiple views. Diversity of thought and diversity of thinking are really important in terms of the people we hire, and how we unleash that internally” – Caroline Ross, chief human resources officer, Channel 4. She discusses how tech is changing the way HR works here.
“You should only tell brand stories if you genuinely care about that story and believe in it” – Shamil Thakrar, co-founder, Dishoom. He talks on Dishoom’s immersive brilliance here.
From all of us at The MBS Group, we wish you, your family, friends and colleagues a happy and peaceful festive period.